New Head of OPEC is Iranian Military Hardliner
If we had thought the world’s economy wasn’t in enough turmoil, how will Iran’s top revolutionary guard commander with his hand on the tiller of world oil prices sound to the world oil market? That is now the reality after a vote taken Thursday in Iran’s Parliament saw the Islamic Revolutionary Guard Corps (IRGC) commander, Rostam Ghasemi, beat of the challenge of three other candidates to become Iran’s new Oil Minister – and, automatically, head of OPEC.
Of the 246 votes available in the 290-seat Teheran Parliament on August 3, Ghasemi took 216. The move is being seen touted by the Iranian media as a direct response to the West’s imposition of international sanctions.
Iran’s government-sponsored Fars news agency quotes Ramedan Sharif, head of the revolutionary guard’s PR unit, as saying, “The clever and decisive vote of Iranian MPs for engineer Ghasemi to become oil minister is a meaningful and crucial response to attacks against the guards from the west’s media empire.”
Ali Motahari, a prominent conservative MP a man, who in the past has called for the impeachment of President Ahmadinejad, argued strongly against the move. Motahari, told Parliament, “The integration of the guard, as a military force, in political and economic power is not in the interests of the system.” He added, “In neighbouring countries, military officials are distancing themselves from politics and power, while it’s the opposite in Iran.”
Last October, the Obama administration ratcheted up tensions over Iran’s nuclear program by imposing fresh sanctions. But this time it got personal. The U.S. sanctions specifically froze the assets in U.S. jurisdictions of four affiliates of the IRGC, and one individual: Rostam Ghasemi.
In May this year, evidence of the heavy involvement of the IRGC in Iran’s economic affairs was confirmed when Ghasemi, speaking on behalf of the IRGC command, made it clear that they would take over lucrative oil contracts left behind by French Total and Royal Dutch Shell, who pulled out after international pressure over the nuclear stand-off. Ghasemi also expressed the desire for the IRGC to expand its scope of economic and construction activities outside Iran. Taking the chair at OPEC is perhaps beyond even what Ghasemi and the IRGC had in mind when it came to expanding IRGC’s ‘activities’.
However, as I wrote just a few days prior to the appointment, Ghasemi’s influence at OPEC will not necessarily extend to having a stranglehold on other members. For a start, the issue of the Shia (Iran) v Sunni (Saudi and most others) ‘divide’ is likely to play a significant ‘behind the scenes’ role if Ghasemi attempts to use OPEC for his, or the IRGC’s, own ends, whatever OPEC’s public rhetoric.
Saudi interests at OPEC are not necessarily Iran’s. 40 percent of the world’s oil is exported to the world through the Straits of Hormuz; most of it from Saudi Arabia. If the Iranian’s moved to close the Straits off their coastline to cut off oil to the West in the nuclear stand-off, it clearly would not be in the economic interest of the Saudis.
Moreover, it is worth reminding ourselves of the ‘behind the scenes’ realities at OPEC as they were confirmed by last year’s Wiki-leaks’ U.S. security email expose. In them we learned:
Saudi King Abdullah repeatedly urged the United States to destroy the Iranian program. “He told you [Americans] to “cut off the head of the snake,” the Saudi ambassador to Washington, Adel al-Jubeir said, according to a report on Abdullah”s meeting with the U.S. general David Petraeus in April 2008. Abdullah told a US diplomat: “The bottom line is that they (the Iranians) cannot be trusted.”
Ghasemi’s appointment as head of OPEC is just as likely to unsettle nerves in the royal palace in Riyadh and in the capitals of other OPEC members as it will in Western capitals and in the global oil markets. But for the reasons given, the actual extent of Ghasemi’s influence is yet to be seen.
One thing’s for sure, the road ahead for the global oil markets just got bumpier.